Eying a Near-Term Correction in Equities and Rally in Bonds (Question is One of Durability for Each)

A near-term equity market correction and a bond rally are underway

Highlights

• A near-term equity market correction and a bond rally are underway

• Rotation out of tech-driven momentum is likely to continue

• The AI hype is beginning to face doubts about future financial returns

• The current term premium reflects risks from tariffs and OBBB

Key Takeaways

• AI Euphoria Faces Some Doubt as Financial Realities Emerge: Don’t look now but the Magnificent 7 stocks are riding a four-day losing streak for the first time since mid-April — what has made the rounds is an MIT report showing that 95% of the corporate sector has yet to see any positive returns on generative AI investments (the fact that Meta has implemented a hiring freeze could be a telltale sign).